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Trading With THE RSI EDGE

The document discusses using the relative strength index (RSI) to analyze trends and signals in financial markets. It explains key RSI concepts like divergence signals, bullish and bearish reversals, and using moving averages with range analysis. Parameters for overbought, oversold and bull/bear ranges are provided. The document shows how to identify positive and negative reversals using RSI charts and signal counts.

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Dinesh C
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
2K views9 pages

Trading With THE RSI EDGE

The document discusses using the relative strength index (RSI) to analyze trends and signals in financial markets. It explains key RSI concepts like divergence signals, bullish and bearish reversals, and using moving averages with range analysis. Parameters for overbought, oversold and bull/bear ranges are provided. The document shows how to identify positive and negative reversals using RSI charts and signal counts.

Uploaded by

Dinesh C
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Trading with

THE CARDWELL RSI EDGE


“All men are created equal – some just work harder in the
preseason.”
- Reebok Commercial
Divergence Signal Counts

Trend Analysis Range Analysis

Trend Change Moving Averages

Pattern Recognition

Combining Range Analysis


With
Moving Averages

Price Forecasting
with
Positive & Negative Reversals
Range Analysis with RSI

100 Parameters of RSI


90 Extreme Overbought 1. Value of RSI (0-100)
2. Normal Range: 70/30
80 3. Bull Range: 80/40
Initial Overbought 4. Bear Range: 60/20
70 5. Overbought/Oversold:
80/20
60 POSITIVE 6. Mid Point or Basis Level: 50

50
40 NEGATIVE

30
Initial Oversold
20
Extreme Oversold
10
0
Range Rules

80/40  60/20 60/20  80/40

100 100

80 80
A 80/40
60 80/40 60 D

B 60/20
40 60/20 40 C

20 20

0 0

Note - Bull Range: 80/40


Bear Range: 60/20
Seeing the Trend

Positive Trend Negative Trend

65 65
1
3

55 55 2
2

45 45

1 3

35 35
1. Short-term trend turning up 1. Short-term trend turning down
2. Intermediate trend turning up 2. Intermediate trend turning down
3. Intermediate/Long-term up 3. Intermediate/Long-term down
(Begins upside acceleration) (Begins downside acceleration)
RSI Divergence & Signal Count

 Momentum Highs / Momentum Lows


 “X” Points
 Bullish / Bearish (Positive Reversal / Negative Reversal)
 Degree of: Short, Intermediate, Long-term
 The Signal Count (2-5)
Basic Divergences
Bullish Divergence – 2 Period Signal

106 1
104
103

99 2
X 1 100
X
2

Bearish Divergence – 2 Period Signal


100 X

103 2

98

97 1
96

X
1 2
RSI Chart
Bearish Divergence Negative Reversal
121
121
123 (2)
(X) 123
120 (2) (X)
119 119
120
(1) 117 118 120
118 (1)

Negative Reversal Target


X = Momentum high X – 2 = 2 (123 – 121 = 2)
118 – 2 = 116 or Lower

Bullish Divergence Positive Reversal


121 120 119
120 119 (1)
(1) (2) 123
117
118 115
(X) (X)
117 115
(2)
118

X = Momentum low Positive Reversal Target


2 – X = 3 (118 – 115 = 3)
120 + 3 = 123 or Higher
The ABCs of RSI
L
170 N
J 174 P
163 175
T
X
168
H M R 163
O (NR) V
159 165 170 (NR)
169 166
D F Z
155 **
145 158
B
140 Q
163 U
I K 163
157 159 S W
E (PR) 157 155 Y
142 G 154
148
C (PR)
125

A
130

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